Telecom's new accounting requirements under operational separation

The New Zealand Commerce Commission has released a draft paper on Telecom’s accounting requirements, under operational separation legislation. Under the Commerce Commission’s new financial reporting requirements, Telecom will now have to disclose information regarding financial aspects of its group’s business activities. The Commission has the power to request cost information, asset valuations, non-financial information and other information pertaining to other business activities.

The Commission believes that full regulatory reporting will begin on July 1 2009, with limited transitional provisions applying for the year 1 July 2008 to June 30 2009. After Telecom publishes its first quarter results in November 2008, the Commission will then identify what additional information it deems necessary for accounting purposes.

For the transitional 2008-09 reporting year, Telecom must prepare a consolidated statement of its financial position. This will include details about its three business units, Chorus, Wholesale and Retail.

For the 2009-10 year, Telecom must file the following:

A separate Statement of Financial Performance, and an opening and closing Statement of Financial Position for each business unit for the full financial year.
Product Statements for key regulated services which itemise revenue, costs, capital employed (or debt and equity when appropriate), and volumes.
Statement of Assets which summarises all of Chorus’ assets which meet a materiality threshold to be set by the Commission.
Statement of Capital Investment which relates to all capital expenditure made during the year relating to those assets covered by the Statement of Assets.